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RISK MANAGEMENT Avoiding Violations

RISK MANAGEMENT Avoiding Violations. Instructor’s Name. Introduction. Risk Management is all about you, the licensee, being able to make a good living selling or leasing real estate while staying out of trouble. Two major areas of concern: Alabama License Law

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RISK MANAGEMENT Avoiding Violations

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  1. RISK MANAGEMENT Avoiding Violations Instructor’s Name

  2. Introduction Risk Management is all about you, the licensee, being able to make a good living selling or leasing real estate while staying out of trouble. Two major areas of concern: • Alabama License Law • Property Condition & Disclosure

  3. I. Alabama License Law “Who Are These People?!” Immediate family What License Law says Case Study

  4. “Who Are These People!” Can you buy your own listing? Disclosure is the key Case Study

  5. “It’s Not Your Money!” Trust funds Escrow deposits Earnest money Security deposits Rent monies

  6. “It’s Not Your Money!” How should the salesperson handle earnest money? How should the broker handle earnest money? Discuss – How is earnest money processed in your company?

  7. “It’s Not Your Money!” Who can disperse the earnest money? Case Study

  8. “It’s Not Your Money!” Security deposits Rental payments

  9. “Don’t Try To Fool The Banker!” (Mortgage fraud) Do not deceive the lender

  10. “Uh-Oh! What Do I Do Now!” Licensee in trouble Notify the Commission

  11. “But You Can’t Do That!” Unlicensed assistants Discuss – An unlicensed assistant can or cannotperform the following acts

  12. “Tell The Truth!” False advertising Discuss – License Law requires that your company’s name appear with your name. • How does this apply to your postings on Facebook? • What about when your postings appear on another person’s page?

  13. “Is There Any More?” Other thoughts on Alabama License Law

  14. II. Property Condition and Disclosure IMPORTANT POINT #1 “Who’s Doing The Suing!” Buyers Concerning the property condition After closing

  15. “Buyer Beware!” IMPORTANT POINT #2 Caveat emptor

  16. “Buyer Beware!” The exceptions to “caveat emptor” • New construction • Health and safety • Direct inquiry • Assumption of a duty

  17. “Buyer Beware!” The exceptions to “caveat emptor” Case Study #1 Case Study #2

  18. “Buyer Beware!” An apparent contradiction License Law Case Law A suggestion Defer to Case Law

  19. “You’re Gonna Lose If . . . .” When to really worry about a lawsuit Misrepresentation Reliance Damage

  20. “Hire The Experts!” IMPORTANT POINT #3 The home inspection

  21. “Inspection Do Not’s” Do not perform Do not accompany Do not interpret Do not use the seller’s inspector

  22. “If The Buyer Says ‘No’!” Question the decision Document the decision

  23. “Seller’s Disclosure – To Use Or Not To Use!” Discuss – Does your company use a Seller’s Disclosure Statement? If so, how do you use it? What about a Buyer’s Acknowledgment Statement?

  24. “As Is!” Discuss – How can a buyer’s agent protect the client and himself/herself when buying an “as is” property? Discuss – Share any learning experiences in the sale of “as is” foreclosures.

  25. “What Really Happened There!” Stigmatized Properties Case Study

  26. “What Really Happened There!” Recommended steps: Fact or fiction? Check state laws Determine materiality Discuss disclosure

  27. “The Cost Is High!” Penalties • from the courts • from the Alabama Real Estate Commission

  28. Final Thoughts On Property Disclosure

  29. III. Conclusion Keys to effective Risk Management

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